Winter Wheat Acreage Drops

Futures Prices Soar

January 11, 1997|By From Tribune News Services.

WASHINGTON — U.S. farmers sowed just 48.2 million acres of winter wheat--a stunning 7 percent decline that hinted at tight supplies--the Agriculture Department said Friday. It said corn and soybean stockpiles would quickly dwindle to scanty levels.

Futures prices soared on the Chicago Board of Trade after the reports were released. Corn and soybeans quickly hit the daily limit for price increases, and wheat rose as much as 15.5 cents a bushel before settling back.

"The biggest shocker . . . was the winter wheat acreage number, the lowest since 1978," said Dan Basse of the Chicago-based analytical firm AgResource Co.

Grain and soybean prices have gyrated for the past two years because of tight U.S. supplies, but food prices have been fairly stable. Even though U.S. farmers grew the third-largest corn crop and the second-largest soybean crop on record in 1996, supplies are expected to stay barely ahead of voracious demand.

The winter wheat report offered the first look at possible crop output for the new year. Analysts had expected 51.4 million acres would be planted to winter wheat, about the same as the 52 million planted for last year's crop.

Private analyst John Schnittker said the lower acreage could reduce U.S. wheat output by 120 million bushels.

Soybeans for March delivery shot up 30 cents, the daily trading limit at the Chicago Board of Trade, closing at $7.29 a bushel, the highest for the March contract since Oct. 10. Soybean meal, a key protein in livestock feed, jumped $9.40 a ton on the March contract to settle at $229.50, also the highest since Oct. 10.

Wheat for July delivery, reflecting the summer harvest, rose 8.5 cents on the Chicago Board of Trade, closing at $3.54 a bushel, the highest since Oct. 23, amid concern that reduced plantings point to tighter supplies in the months ahead.

Corn, the top ingredient in livestock feed, rose 7.25 cents on the March contract to settle at $2.65 a bushel on the CBOT, the highest since Dec. 26 but well short of last summer's peak price of $5.16.

The Agriculture Department forecast stockpiles would shrink to 374 million bushels of wheat, 155 million bushels of soybeans and 959 million bushels of corn before the new crops mature. The corn and soybean estimates were 1 percent to 2 percent smaller than a month ago.

Schnittker said the reports increase the chance of food price inflation later in the year, but Mike Hoover, an analyst with the WEFA Group in suburban Philadelphia, said he expects farmers will plant enough corn and soybeans to relieve some of the pressure.

In its final look at 1996 crop output, the department raised its corn estimate slightly to 9.29 billion bushels, marginally reduced soybeans to 2.382 billion bushels and held wheat at 2.281 billion bushels.